an assessment of ontario's health strategy

Canadian Public Policy

An Assessment of Ontario's Health StrategyAuthor(s): Paul BarkerSource: Canadian Public Policy / Analyse de Politiques, Vol. 16, No. 4 (Dec., 1990), pp. 432-444Published by: University of Toronto Press on behalf of Canadian Public PolicyStable URL: http://www.jstor.org/stable/3550857 .

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An Assessment of Ontario's Health

Strategy PAUL BARKER Department of Political Science Brescia College, University of Western Ontario

En 1987, le gouvernement ontarien a mis de I'avant une nouvelle politique de la sant6 qui met l'accent sur une nouvelle orientation des systemes de sant6 provincial. Les soins hospitaliers et m6dicaux seraient r6duits grace a une plus grande utilisation des services communautaires, de promotion de la sant6 et de pr6vention des maladies. On espere que ces choix accroitront la qualit6 des soins, et, encore plus important, en reduiront les couts. Cependant, une analyse de cette politique indique que cette nouvelle orientation n'atteindra pas ces objectifs et qu'une approche plus prudente en ce moment serait de moins mettre l'emphase sur les services communautaires et autres services de meme nature et de plut6t chercher a amener des changements dans les soins hospitaliers et m6dicaux.

In 1987, the Ontario government introduced its new health strategy, which focusses on shifting the orientation of the province's health system away from hospital and physician care and towards a greater reliance on community-based services, health promotion, and disease prevention. The hope is that the strategy will increase the quality of care and, more important, limit health care expenditures. An analysis of the health strategy suggests, however, that it will fall short of its aims, and that a more prudent approach at this time would be to concentrate less on the development of community-based services and the like and more on making changes in the area of hospital and physician care.

In its Throne Speech of November 1987, the Government of Ontario announced a

new strategy for health care (Hansard, 1987:7). The intent of the strategy was to redirect the Ontario health system away from a reliance on hospital and physician care and towards the development of community-based services and an emphasis on health promotion and disease prevention. The belief was that the shift in orientation would produce a higher quality of care and, more importantly, contain health care expenditures.

The government's strategy was not a new one, for other governments, in and outside Canada, had in the past indicated a

desire to move in a similar direction. Typi- cally, however, the follow-up had, for various reasons, failed to meet expectations. A similar fate, though, has not befal- len the Ontario strategy. In the last two years, the Ontario government has aggres- sively pursued reforms it outlined in 1987. Cancer screening, health promotion, community health centres, home care, free- standing surgical units - all these and more have been addressed, suggesting a strong commitment to change.

Accordingly, Ontario's new health plan deserves careful consideration. It is widely accepted that this country's public health care system, medicare, must constantly

Canadian Public Policy - Analyse de Politiques, XVI:4:432-444 1990 Printed in Canada/Imprim6 au Canada



evolve and change to ensure the provision of efficacious care at a reasonable cost, and recent developments in Ontario reflect this basic concern. However, it is not clear that Ontario's new approach to health care is, upon examination, the best way to proceed. The strategy recognizes that adjustments in the traditional area of hospital and physician care are necessary, but focusses on health service organizations, disease prevention, and the like. In truth, the accent should be on the old services, not the new. The government's strategy is a case of mis- placed emphasis.

Rationale for Strategy

The impetus behind the strategy is the concern of the Ontario government with its expenditures on health care. This concern can in turn be divided into three parts. The government believes, first of all, that the level of health care expenditures in Ontario is too high. In 1988/89, the Ontario Minis- try of Health spent an estimated $12.6 billion on health care, which represented about one-third of the total Ontario budget (Ontario Ministry of Treasury and Eco- nomics, 1988:94-95). For government ministers, this translates into a large and expensive health care sector.1

The government also believes that health care costs, along with being too high, are increasing at an unacceptable rate. The Throne Speech of November 1987 prefaced the discussion of the health strategy with the assertion that the province was 'in the midst ... of rapid increases in the cost of health care delivery' (Hansard, 1987:4), and six months later the provincial Treas- urer, in his budget speech of 1988, referred to escalating health expenditures (Ontario, 1988:9). Shortly thereafter, the Minister of Health made the point more bluntly: 'health-care spending [in Ontario] is on a collision course with economic reality' (Globe and Mail, June 8, 1988:A9). To sub- stantiate its claim, the government points out that during the years 1978/79-1988/89 provincial health care expenditures in-

creased from $4.0 billion to $12.6 billion, and that over this same ten year period the increase in real health costs outpaced real growth in the provincial economy (Ontario Ministry of Treasury and Economics, 1988:94-95).

The government's final contention concerning costs is that the rate of increase in costs could grow because of the burgeoning presence of elderly persons, who consume a disproportionate amount of health care (Premier's Council, 1989a:2). The Report of the Ontario Health Review Panel, a study of Ontario's health care system and the source for much of the government's strategy, estimated that for the period 1986-2006 the number of persons 65 and over will increase by about 50 per cent and the number 75 and over by about 80 per cent while the population of Ontario as a whole will only rise by 14 per cent (Ontario Health Review Panel, 1987:18). The impli- cation of this demographic shift, for the authors of the report and for the government, is clear: without major changes to the manner in which the health system deals with senior citizens, expenditures on health care will climb even more dramatically in the future.

Costs constitute the major concern of the government and hence form the basic rationale for the new strategy, but there is an additional concern. According to the government, the quality of care presently offered through the provincial health system could be improved. Government repre- sentatives note, for example, that some medical procedures are either unnecessary or actually detrimental to the health of the patient (Globe and Mail, October 19, 1988:A3), and that, overall, additional expenditures on the existing health system contribute little to the well-being of provincial residents (London Free Press, April 16, 1988:A1). Moreover, the report of the On- tario Health Review Panel found that some patients are placed in nursing homes when they could be better cared for in their own homes, that others are admitted to hospitals when they could be dealt with through

Ontario's Health Strategy 433



community-based services, and that still others remain in the hospital for too long a period (Ontario Health Review Panel, 1987:31,33).

As can be seen, the issue of quality of care is related to the concern over cost. The government's major aim is to achieve cost savings, but there is also the hope that changes to the health system, like those suggested by the health strategy, will lead not only to a less expensive system, but also to one which offers better care.

The Strategy

The new strategy flows directly from the government's apprehension over health care costs and the quality of care.2 The strategy entails the testing and eventual establishment (or expansion) of services with the purported capacity to address the twin concerns of the government. These services can be grouped into three categories.

One category includes community-based services designed to reduce the need for expensive hospital and physician care. One such service is home hospital care, which involves the provision of nursing care and other forms of assistance in the home and thereby allows for early discharge from hospitals. A similar type of service, the ex- tramural hospital program, endeavours to eliminate the need in some cases for any type of hospital care. Another form of community-based care is day surgery, which facilitates the provision of surgical care without the need to be admitted to a hospital for a day or more. From the government's viewpoint, these services will both save money and increase the quality of care.

A second category deals with health service organizations (HSOs), community health centres (CHCs), and comprehensive health organizations (CHOs). These are delivery mechanisms which, among other things, remunerate physicians on a salary or capitation basis and thus remove the in- centive to provide care which is supposedly present in fee-for-service payment arrangements. These structures are also con-

sidered by the government to be ideal for the development of health promotion programs.

A third and final category involves services associated with health promotion and disease prevention. The government contends that it is less expensive to prevent ill- ness than it is to treat it, so it has committed itself to expanding services to maintain a healthy population and to stave off disease. Under health promotion, the government promises educational programs that warn residents of the dangers of alcohol, smok- ing, and other habits which have a delete- rious effect on health. Through health promotion activities, citizens will also develop, the government hopes, a greater sense of responsibility for their own health. With respect to prevention, the government has not been very specific, but initial actions stemming from the health strategy suggest it will invest more funds in such services as vaccines for communicable diseases and screening programs for hypertension and cancer.

The government has, since its November announcement, taken steps to carry out the new strategy. It has set up a $100 million 'health innovation fund,' the purpose of which is to test the effectiveness of certain community-based services and to provide initial funding for health promotion. It has also supplied the resources necessary for the establishment of an extensive screening program for breast cancer among high-risk groups. As well, the premier has committed his government to doubling enrolments in HSOs and CHCs over the next five years, and the Ministry of Health has since 1987 agreed to the establishment of new centres. Also, the province, with the passage of the new Independent Health Facilities Act, is attempting to encourage the development of clinics that offer surgical and other types of services outside the hospital. Still another sign of the strategy is the reorgani- zation of the provincial Ministry of Health to mirror the commitment to health promotion and community-based services.

Finally, a new body, the Premier's Coun-

434 Paul Barker



Table 1 Health expenditures of provincial governments as a percentage of provincial Gross Domestic Product

Province 1988/89 Average for 1983/84- 1988/89

Nfld 7.9 8.0 PEI 7.4 7.7 NS 7.7 7.6 NB 7.4 7.3 Que 5.4 5.6 Ont 5.4 5.3 Man 6.1 6.4 Sask 7.0 6.9 Alta 5.7 5.6 BC 6.0 6.2

SOURCE: The percentages are calculated by combining data on provincial health care spending found in Sta- tistics Canada (unpublished) with data on provincial GDP found in Statistics Canada (1989a: Table 1) and Statistics Canada (1989b: Table 1).

cil on Health Strategy and chaired by the premier himself, David Peterson, has been set up to implement the new strategy. In its report, the Ontario Health Review Panel recommended such a council, arguing that the latter is essential in order 'to signal not only the highest level of governmental par- ticipation, but also to command a similar commitment from external participants' (Ontario Health Review Panel, 1987:65). The government has, wisely, followed the advice of the panel.

The government's official pronouncements on its health strategy have been limited mostly to the discussion of high and increasing health costs and the consequent need for these costs to be addressed through the development of community- based and health promotion services. However, the actions of the government suggest that the strategy includes a further element. The government has completed a controversial review of acute care hospitals with chronic deficits, which concluded that government should no longer assist hospitals whose spending exceeds budgeted allo- cations. The government has also initiated a more general examination of present practices of funding hospitals. In addition, it has set up a task force to study the factors responsible for increases in expendi-

tures on physicians, and has mentioned the possibility of limiting both the number and the incomes of doctors. All of these actions indicate that the government wishes, at a minimum, to confine the old services while testing and introducing new ones. A recent government publication appears to support this observation (Ontario Ministry of Health, 1989a).

The foregoing discussion demonstrates that the Ontario government is engaged in a very ambitious undertaking. However, the more important issue is whether it is engaged in a sound undertaking. An analysis of the health stategy suggests that it is not. As will be shown, each element of the strategy - the underlying rationale, the emphasis on community-based services and health promotion, and the belief that the traditional health care sector can be con- tained - lacks a strong basis. Ontario's health care system needs change, but not necessarily in the direction proposed by the new health strategy.

Rationale

As indicated, the major reason for the health strategy is the purported problem with spending on health care. For students of Canadian health policy, this may come as a surprise, given that one of the attractions of the Canadian system has been its repu- table record on expenditures; this is espe- cially true for Ontario, which has been called the 'home of cost control' (Evans and Stoddart, 1986:72). Nevertheless, there are grounds for the government's concern, although the evidence does suggest that the problem may be exaggerated.

With respect to the level of expenditures, the government is correct to say that $12.6 billion represents a significant investment in health care. As well, it is relevant to note that in 1988/89 Ontario ranked second among provinces in terms of nominal per capita expenditures by government on health care (Statistics Canada, unpublished data). However, there are other data to consider. Table 1 provides an inter-




Table 2 Real increases in health care spending and Gross Domestic Product, Ontario

Year Increases in Increases in Health Spending* GDP*

1978/79- 1988/89 61.9%# 42.7%

1978/79- 1983/84 20.0 6.8

1983/84- 1988/89 35.0 33.6

* Health care expenditures are adjusted for inflation by the CPI for Canada. GDP is adjusted by the GDP deflator calculated by the Ontario Ministry of Treasu- ry and Economics. # This percentage is slightly different from the one calculated by the Ontario Ministry of Treasury and Economics, which is 63.4% (Ontario, 1988:95). The difference is most likely due to rounding. SOURCE: Statistics Canada (1989c), Ontario Ministry of Treasury and Economics (1988), and information provided by the Ontario Ministry of Treasury and Econo- mics.

provincial comparison of total health expenditures expressed as a percentage of Gross Domestic Product (GDP), and it shows Ontario to be almost miserly in its spending on health care - only Quebec spent as little of its GDP on health care as Ontario in 1988/89. That Ontario can still rank second on per capita spending while allocating relatively so little of its economic pie to health care reveals one of the benefits of being a wealthy province.3 Further, Table 1 reveals that Ontario's spending on health care expressed as a percentage of GDP has remained fairly stable over the period 1983/84-1988/89 - the percentage of 5.4 for 1988/89 is not an aberration. A final point to make is that there appears to be room for more spending on health in On- tario, since the province ranks seventh among the provinces in terms of per capita spending in all areas (Ontario, 1988:15).

On the matter of the rate of increase in health costs, there is again reason to be con- cerned. Table 2 shows real increases in expenditures by the Ontario Ministry of Health for the period 1978/79-1988/89. As

can be seen, overall costs do appear to be growing at a faster and faster rate. More- over, interprovincial comparisons offer further support for the government's argument. In 1983/84, the Government of On- tario spent $869 on health services for each resident of the province, placing it fifth among the provinces in terms of nominal per capita health expenditures; five years later, in 1988/89, the number had risen to $1419, making Alberta the only province, at $1491, to allocate more to health on a per capita basis than Ontario (Statistics Canada, unpublished data). Finally, Table 2 shows, as the government contends, that health cost increases over the last ten years have outstripped real increases in GDP (61.9% to 42.7%).

However, as with the level of expenditures, there are some other points which should lessen the level of anxiety here. It is true that real cost increases for health care have been greater than those for economic growth for the period 1978/79 to 1988/89, but it is also true that almost all of the difference is due to the first five years of this period, which were for the most part beset by severe economic recession. In the last five years, health costs have increased, in fact at a rate faster than the first five years, but the economy has grown at almost the same rate. In other words, the problem is not really with the present situation, but rather with a hypothetical one in which the economy slows down; as the data for 1978- 79/1983-84 in Table 2 show, health cost increases fall in bad economic times, but not nearly as much as those for general economic growth. However, even if the On- tario economy were to slide into a recession comparable to the one of the early 1980s, the situation with health care would not be calamitous. If we assume, for example, the same increases experienced in 1978/79- 1983/83 for the next five years, health care expenditures would only represent around 6.1 per cent of GDP in 1993-94, which would still place Ontario fairly low among the provinces in terms of GDP allocated to health.

436 Paul Barker



The last contention of the government in relation to cost is that the increase in the relative and absolute number of seniors will cause an even greater increase in health care expenditures. It is not obvious that this fear, called by some the 'bankruptcy hypothesis of aging,' has a real foundation (Barer et al., 1987). As most projections of health care costs show, there is only a problem if the enlarged demographic presence of elderly persons is accompanied by increased per capita utilization of health services by this same group. The latter has, in fact, been the trend in recent years, but it is believed that this stems not from the needs of seniors but rather from the increasing supply of physicians and the resulting tendency of physicians to generate services so as to maintain target levels of income; in short, the problem is with the doctors, not with the senior citizens (Evans, 1987:176). Moreover, much of the discussion of the effect of elderly persons assumes a rudimentary policy process, one driven largely by demographic factors, but evidence suggests that public policy is rarely the result of any one factor (Barker, 1980).

The preceding discussion indicates that there are some valid concerns about provincial spending on health in Ontario, but that the situation is not out of control. Some government pronouncements on this matter, including those which relate directly to the strategy, have an air of desperation about them, but the data show that these are not desperate times for health care in Ontario. The implications of this conclusion for the government's health strategy will become evident later in the paper.

The government's second major concern is the present quality of care. The position of the Ontario government is basically the one put forward by the Ontario Health Re- view Panel. The panel concluded that im- provements could be made through the more 'appropriate utilization of services,' which necessitates a 'shift in emphasis from institutional to community-based care' (Ontario Health Care Review Panel, 1987:31). This formulation is at least partly

right. It appears that care could be offered in a more appropriate manner; traditional measures of health status are unaffected by differences in the amount spent on health care, which leads most to conclude that present health care spending is having little effect at the margin. As well, there are individual cases which clearly demonstrate that the quality of care could be higher. However, what is not so easily acceptable is the other half of the government's position, that improving the quality of care means relying more on community-based services and less on the traditional health care sector. The resolution of this issue requires an assessment of the government's plan.

New Health Services

The government's strategy centres on three categories of health care services. The expectation is that these services will sig- nificantly limit the growth in health care costs and effect a higher quality of care.

With respect to the first category, community-based services, studies suggest that the government should be careful about relying on this form of care to contain the size of the health care budget. The use of community services as a cost-controller assumes at a minimum two things. First, the cost of the community-based services is less than comparable care offered through the established sector. Second, the addition of the community-based service to the roster of available care is accompanied by the re- moval of a service from the institutional sector.

In some instances, studies show that the first assumption fails to hold. A rigorous study of home care in Newfoundland found no real cost differences between home care and similar care in a hospital (Gerson and Hughes, 1976); as well, a conference of ex- perts on Canadian health policy concluded that the evidence suggests that home care and the like costs more, not less or the same, as institutional care (Evans and Stoddart, 1986:460). It also appears that there are grounds for suspecting the tena-




bility of the second assumption. A study of day surgery in British Columbia revealed that this particular service was indeed less costly than inpatient hospital care, but that the cost-savings largely disappeared because the beds left vacant by those using day surgery were not closed down but in- stead were simply filled with other patients (Evans and Robinson, 1980). A review of the experience in the United States with ambulatory surgical centres comes to a similar conclusion, and then points to the underlying problem:

... savings from carrying out ambulatory surgery must depend on some kind of overall community agreement about limiting total surgical volume, and that agreement simply does not exist. Many hospitals that have established outpatient surgical programs have not decreased inpatient surgical capacity. Net increases in surgical volume (and overall expense) have often been the result (Egdahl, 1984:126).

The same can be said of community-based care in general, that it appears to have little effect on or connection with the more established services (Weissert, Cready and Pawelak, 1988; Evans, 1984:200-1).

The community-based approach may, however, be more successful if expectations in respect of costs are more modest. In the case of day surgery noted above, there was not the expected cost-saving, but it could be argued that the service might eventually reduce the rate of increase in costs if it pre- cludes the need to set up more hospital beds. However, this assumes that the person receiving the community-based service is one who would have otherwise been hospitalized. Research on this question in Canada is skimpy - a recent report for the Ontario Ministry of Health simply assumed this to be the case for 25 per cent of those using home care (Price Waterhouse, 1989: 24) - but American studies suggest that most of the users of such services are not at risk of institutionalization (Weissert, 1985: 424). Consequently, the provision of community-based services would not even ef-

fect a small reduction in the rate of increase in costs; it would represent a new type of care being provided to a new client group, a development which may make for a more comprehensive health system, but does nothing for cost containment.

As for the aim of increasing the quality of care, the community-based services fare better than they do on reducing costs. By restricting the need for hospital care, these services limit the risk of infection and other iatrogenic events which might occur in the hospital environment, and they also appear to have the desired impact on the content- ment of patients (Weissert, 1985:429).

A second category of services includes CHCs, HSOs, and CHOs. These services seem to provide some promise of reducing costs. In Canada, few studies of these services have been completed, but the ones that have been carried out indicate that these services are capable of resulting in con- siderable reductions in the use of hospital care and an increase in the quality of care. One study, which compared a CHC with fee-for-service physicians in solo practices, found that patients enrolled in the former had 24 per cent fewer hospital patient days than those enrolled with the latter, and that the CHC had a greater commitment to health promotion (Lomas, 1985:167). However, a study involving a CHC and fee- for-service physicians in a group practice found no differences in cost and quality of care (Weinkauf and Skully, 1989).

In the United States, organizations roughly comparable to HSOs and CHCs, called Health Maintenance Organizations (HMOs), have been examined in great detail. The consensus emerging from these studies is that HMOs have the potential to reduce hospital utilization by almost one- half. Arguably the most thorough study in this area found that the HMO had 40 per cent fewer hospital admissions than the fee-for-service arrangement and that its expenditures were 28 per cent lower (Man- ning et al., 1984).

It is obvious, then, that HSOs and CHCs and other non fee-for-service arrangements

438 Paul Barker



have the potential to reduce health care costs substantially. However, as with the proponents of the community-based services, those who urge greater use of such arrangements assume that increased patient enrolment in these institutions will result in a commensurate decrease in the use of the traditional health care sector. In the case of HSOs, CHCs, and HMOs, this is largely an untested assumption, given that all studies merely compare the cost per- formance of fee-for-service and non fee-for- service arrangements. What has to be determined is what happens to the established hospital sector in an area in which HSOs and the like are introduced. If it is found that the sector is unchanged, which appears to be the case in areas of the United States with a relatively heavy concentra- tion of HMOs (Evans, 1986:607) then the CHCs and HSOs will have a less-than-expected effect on the rate of increase in health expenditures.

Concerning the impact of these services on quality of care, the few studies done in this area, and they are nearly all American, show that the use of HMOs and similar arrangements may lead to a small improve- ment in the health status of individuals (Ware et al., 1986). In these studies, quality of care is associated with measures of various dimensions of health. However, if consumer preference is included in the series of measures, then HMOs as a whole do less well relative to traditional arrangements. Patients appear to cherish the doctor-patient relationship, something which is missing in HMOs, largely because of their tendency to place patients with the physician available at the time of the appoint- ment. Interestingly, consumer dissatisfac- tion with HMOs is also linked with the strength of HMOs: patients feel that they are being denied necessary hospital care (Davies et al., 1986).

A third type of service is health promotion and disease prevention. With regard to health promotion, there is a great deal of uncertainty about the ability of such services to reduce costs or increase the quality

of care. As Evans shows, proponents of health promotion assume, unrealistically, the successful linking of a number of events. For a policy intervention to have an impact on quality of care, for example, it must first affect the target population and then have the desired impact on the population's health status, but neither link has been firmly established through research (Evans, 1984: 276-78). As for the question of health promotion and cost, the challenge is even greater, for it must be demonstrated not only that the intervention affects the health status of an individual but that this change in the well-being of a person will produce a lower demand for health care and a resulting decrease in health care expenditures. Although there is some evidence which suggests that health promotion activities do reduce the use of medical care (Fries, Green and Levine, 1989:483), the equating of such programs as lifestyle advertising, diet counselling, and health ed- ucation with lower health care spending needs stronger substantiation. Accord- ingly, the preferred approach towards health promotion seems to be more research, to which the Ontario government, to its credit, has committed itself.

As for disease prevention, a fair amount of solid research has been done on this issue, and the findings indicate that governments should look elsewhere if they wish to cut or reduce costs. After an extensive review of evaluative studies of disease prevention, Russell concludes that '[p]re- vention is not the solution to the problem of rising medical expenditures' (Russell, 1986:110) Major cancer screening programs, vaccines for influenza, pneumococ- cal pneumonia, and measles, and screening tests for lead poisoning and cholesterol among children all produce costs which are higher than those which would have been incurred in their absence.

At first, this finding may be difficult to accept, for it seems obvious that it is pref- erable to prevent rather than to treat disease, but a closer look at the issue makes Russell's argument more believable. Per-




haps the most rigorous studies in this area are those which compare the cost of hypertension screening programs and treatment of heart disease. They find the former, the screening programs, to be much more expensive, largely because of the number of steps associated with them and the number of people who participate (Russell, 1984:93- 94). A participant at a recent conference on aging and health care summarizes one such study:

A detailed study has just come out in the United States ... showing that screening for hypertension is certainly more expensive than the heart attacks that may result in its absence. Although that seems rather unlikely at first, screening involves a very large number of people. And it pro- duces a large number of false positives, requires lifelong medication when properly diagnosed, and the compliance rate for taking medication over a long period of time is not very high (Economic Council of Canada, 1987:104).

This, of course, does not mean that preven- tive services should be forsaken. They may lead to an increase in health expenditures, but the benefit associated with the increased investment might be enough to warrant the additional cost. This points to a more general conclusion, that control of costs and increases in quality of care do not necessarily go hand in hand.

Traditional Health Services

The final element of the government's strategy deals with the attempt to control the size of the traditional health sector. This is key to the government's plans, for many of the preceding assessments of proposed health services are pessimistic because of the belief, confirmed by studies, that government is typically unable to contain the size of the traditional sector while

erecting a new one; the new services typically serve to complement, not substitute for, existing services. With its commitment to this last element, the Ontario government has a chance to change this pattern,

to establish a situation in which the new truly replaces the old.

At this juncture, after only two years, it should not be surprising to report that the government has not achieved any great successes with this part of its strategy. However, it has taken some actions which point towards a determined effort to rein in the traditional sector. In the case of hospitals, the government has indicated that it will no longer be bailing out hospitals with over-expenditures. Also, senior ministry of- ficials have articulated their belief that hospitals are providing unnecessary and in some cases harmful care, a comment which presages a more aggressive review of hospital utilization practices. Lastly, the intent behind the Independent Health Facilities Act is to lessen the pressure on hospitals through the provision of surgical care and other forms of care outside the institutional setting. As for doctors, the government has engaged in tough negotiations with physicians over fee increases. Perhaps more am- bitiously, the government appears serious about its intent to place a ceiling on annual physician expenditures (Globe and Mail, May 17, 1989:A13).

But these are all preliminary activities, ones that hardly suggest real reform of established health services. The fact that the government has backtracked on some its earlier pronouncements - for example, it has provided interim funding for hospitals in a deficit situation - also suggests that it is premature to make any claims of success. Further, the government has been forced to expand the hospital and physician sector in order to address some immediate problems.

In the short term, then, there is reason to doubt that much can be done to this sector, and, as a result, there is also doubt that a community-based strategy would effec- tively contain costs. However, the same need not be true of the long term. The government is aware of all the areas in the traditional sector which hold some potential for positive change. For example, there is increasing evidence that an oversupply of physicians exists in Ontario and in Canada

440 Paul Barker



generally (Barer, Gafni and Lomas, 1989: 95-97). This problem will not be solved overnight, but over time it seems possible to do something about this situation, such as reducing enrolments at Ontario medical schools. Given that each physician consti- tutes an annual estimated cost of about half a million dollars, the savings from con- straining the supply of physicians are not insignificant (Evans, 1986:605-6). The in- tention to place a ceiling on physician expenditures may also eventually contribute to a slowing down in the increase of health expenditures (Lomas et al., 1989:97). The introduction of medicare in Ontario (and in Canada) greatly dampened real increases in physician fees, but the absence of utilization controls made it possible for physicians to almost make up for the lower fees through more servicing. The capping is an attempt to do to utilization what medicare has already done to fees (Barer, Evans and Labelle, 1988).

A more radical step would be selective deinsurance of certain services. At present, the Ontario government covers optometric, chiropractic, and physiotherapy services on a fee-for-service basis, a practice which cost approximately $168 million in 1988-89 (On- tario Ministry of Health, 1989b:25) Al- though all three areas of care doubtless provide benefit to many, none is medically required and thus all could be safely elimi- nated from the list of insured services. An even more radical step, and one that could produce cost savings of up to 10-15 per cent of total medical costs, would be a policy of manpower substitution, in which nurse practitioners provide a number of services currently offered by general practitioners (Denton et al., 1983:205).

Perhaps the greatest potential for achieving efficiency gains at relatively little political risk to government is to be found in the field of medical decision-making. It is suspected that one of the major contribu- tors to cost in the health field is the high level of uncertainty in medicine, which may lead at times to the provision of great amounts of unnecessary care. For instance,

it has been estimated that 15-30 per cent of laboratory tests carried out in the United States perform no useful function in the assessment and treatment of patients (Eg- dahl, 1984:1185-6). Since Ontario's costs in this area are rising fast (16 per cent annu- ally over this decade), a set of guidelines outlining the appropriate use of tests could prove helpful (Ontario, 1988:78). The same kind of thinking could be applied to numer- ous surgical procedures with significant payoffs (Vayda and Mindell, 1982; RAND Research Review, 1988:1-3). In general, by looking more closely at patient outcomes and using the available data, researchers should be able to come up with more stand- ardized treatment protocols which should in turn lessen expenditures (Evans, 1983:35-36; Ellwood, 1988).

As stressed, all this will take time, for it amounts to major change, and old practices die hard. For some, time is not what we have; the problems with medicare, espe- cially the cost, require immediate action. But as shown, the cost situation has not reached a crisis stage. There is time for prudent change in Ontario's health system.

Conclusion

A number of conclusions follow from the preceding analysis of Ontario's health strategy. First, it does not appear that the cost picture supports contentions of a health cost crisis. Government spending on health care in Ontario is substantial, it is increasing, and it does have the ability to increase at a faster rate in the future, but this is not to say that costs are too high, that they are increasing greatly, or that seniors will necessarily place inordinate pressure on the health care system.

Second, the new services featured in the strategy fall well short of reducing costs. Indeed, the introduction of these services over the next few years would lead to an increase in overall costs, partly because some simply cost more than existing services and partly because nearly all would fail to substitute for existing services. Third, these




services would probably produce a higher quality of care, which leads to an important point: namely that governments should perhaps accept and capitalize on the fact that the strength of the new services lies not in their ability to reduce costs but rather in the way they improve the caliber of care (Weissert, 1985:430). However, this is unlikely to sit well with governments, including the Ontario government, whose central concern is cost. Further, though Ontario is not in the midst of a cost crisis, health spending is increasing, a trend to which aggressive implementation of the health strategy would only contribute.

Finally, it appears that in the short term any serious containment of the traditional health care sector is doubtful, but that there is great potential for achieving cost savings in this area. A community-based health strategy therefore makes economic sense only in the future, when the government begins to reap some benefit from reforms of physician and hospital care. Con- sequently, the focus now should be on dealing with the old, not the new.

This all amounts to an argument that the Ontario government has a breathing space within which it can pursue changes to the traditional sector that promise substantial benefits. It is also an argument against setting up a new sector in the health care field now. This is not to say that community-based services should be ignored, but only that their introduction must move in lock step with changes in the provision of physician and hospital care. The Ontario government must, in other words, first start to put the established sector in appropriate order before proceeding with innova- tions.

Notes

1 The government's anxiety over the level of health

expenditures is apparent in a number of places. In the Throne Speech, the government begins its discussion of the proposed health strategy with a listing of the relevant expenditure data. In the 1988 Budget, the emphasis is again on the 'mag- nitude' of the expenditures and the possibility

that they may squeeze out other spending priori- ties. In a document which attempts to outline the government's strategy, the Ministry of Health

begins with the familiar litany of facts on spending, and adds that the province is 'one of the highest per capita spenders in Canada' and that Canada 'spends more per capita on health care than any other country in the world with a national health care system ...' (Ontario Ministry of Health, 1989a:2). The same approach is taken in the first major report of the Premier's Council on Health Strategy (Premier's Council, 1989a:2,5). Finally, the comments of government ministers, including those of the Minister of Health, are replete with references to the high cost of health care in Ontario (e.g., Hansard, 1988:5821 and Toronto Star, October 14, 1988:A15)

2 As noted, the strategy was first outlined in the 1987 Throne Speech. The strategy has sub- sequently been addressed in a number of publica- tions and announcments (Premier's Council, 1989a; 1989b; and Ontario Ministry of Health, 1989b). Perhaps the best discussion of the the

government's aims and actions can be found in a

speech made by the Minister of Health in the

Legislative Assembly (Hansard, 1988:5820-5834). 3 Some may be tempted to believe that the differ-

ences in per capita expenditures reflect the varia- tion in the preponderance of elderly persons in the ten provinces. However, an examination of the

rankings of provinces according to per capita spending and the percentage of population aged 65 and over shows little relationship between the two variables (rank correlation coefficient of-.02).

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Barer, Morris L., Robert G. Evans and Roberta J. Labelle (1988) 'Fee Controls as Cost Con- trol: Tales from the Frozen North,' The Mil- bank Quarterly, 66:1:1-64.

Barer, Morris L., Amiram Gafni and Jonathan Lomas (1989) 'Accommodating Rapid Growth in Physician Supply: Lessons from Israel, Warnings for Canada,' International Journal of Health Services, 19:1:95-115.

Barker, Paul (1980) 'Some Economic Implica- tions of the Projected Age Structure of Canada: Comments,' Canadian Public Policy - Analyse de Politiques, V:3:544-5.

Davies, Allyson et al. (1986) 'Consumer Accept- ance of Prepaid and Fee-for-Service Medical Care: Results from a Randomized Controlled

442 Paul Barker



Trial,' Health Services Research, 21:3:430- 52.

Denton, Frank T., Amiram Gafni and Byron G. Spencer (1983) 'Potential Savings from the Adoption of Nurse Practitioner Technology in the Canadian Health Care System,' Socio- Economic Planning Sciences, 17:4:199-209.

Economic Council of Canada (1987) Aging with Limited Resources: Proceedings of a Col- loquium on Health Care (Ottawa: Minister of Supply and Services).

Egdahl, Richard H. (1983) 'Ways for Surgeons to Increase the Efficiency of Their Use of Hospitals,' The New England Journal of Medicine, 309:19:1184-7.

(1984) 'Should We Shrink the Health Care System?' Harvard Business Review, 62:1: 125-32.

Ellwood, Paul M. (1988) 'A Technology of Patient Experience,' New England Journal of Medicine, 318:23:1549-56.

Evans, Robert G. (1983) 'Health Care in Canada: Patterns of Funding and Regulation,' Jour- nal of Health Politics, Policy and Law, 8:1:1- 43.

(1984) Strained Mercy: The Economics of Canadian Health Care (Toronto: Butter- worths).

(1986) 'Finding the Levers, Finding the Courage: Lessons from Cost Containment in North America,' Journal of Health Politics, Policy and Law, 11:4:585-615.

(1987) 'Hang Together or Hang Separately: The Viability of a Universal Health System in an Aging Society,' Canadian Public Policy - Analyse de Politiques, XIII:2:165-80.

and Geoffrey C. Robinson (1980) 'Surgical Day Care: Measurements of the Economic Payoff,' Canadian Medical Association Jour- nal, 123:9:873-80.

and Greg L. Stoddart (eds.) (1986) Medicare at Maturity: Achievements, Lessons and Challenges (Calgary: University of Calgary Press).

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Gerson, Lowell and Owen P. Hughes (1976) 'A Comparative Study of the Economics of Home Care,' International Journal of Health Services, 6:4:543-55.

Hansard (1987) Official Report of the Debates, Legislative Assembly of Ontario, First Ses- sion, 34th Parliament, November 3.

(1988) Official Report of the Debates,

Legislative Assembly of Ontario, First Ses- sion, 34th Parliament, November 14.

Lomas, Jonathan (1985) First and foremost in Community Health Centres: The Centre in Sault St. Marie and the CHC Alternative (Toronto: University of Toronto Press).

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(1989b) From Vision to Action. Price Waterhouse (1989) Report of the Oper-

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(1986) Is Prevention Better than Cure? (Washington: Brookings Institution).

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(1989a) Provincial Economic Accounts, 1976-1987, 13-213 Annual, February (Ot- tawa: Minister of Supply and Services).

(1989b) Provincial Economic Accounts, Preliminary Estimates, 1988, 13-213 (Ot- tawa: Minister of Supply and Services).

(1989c) The Consumer Price Index, January 1989, 62-001 Annual, February (Ot- tawa: Minister of Supply and Services).

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NATIVE LIBERTY, CROWN SOVEREIGNTY

The Existing Aboriginal Right of Self-Government in Canada

BRUCE CLARK Bruce Cark convincingly demonstrates the existence of a constitutional right of self-government for native people, based on an exhaustive treatment of the common law sources and constitutionally binding imperial legislative instruments. "will have a major impact upon public policy, aboriginal rights, and constitutional reform ... The research is exhaustive, the sources comprehensive, and the reason- ing and scholarship sound." David C. Hawkes, School of Public Administration, Carleton University.

McGill-Queen's Native and Northern Series

Cloth 0-7735-0767-1 $39.95

Weissert, William G. (1985) 'Seven Reasons Why it is So Difficult to Make Community-Based Long-Term Care Cost-Effective,' Health Services Research, 20:4:423-33.

-, Cynthia Matthews Cready and James E. Pawelak, (1988) 'The Past and Future of Home- and Community-Based Long-Term Care,' The Milbank Quarterly, 66:2:309-88.

LOST HARVESTS Prairie Indian Reserve Farmers and

Government Policy

SARAH CARTER

Agriculture on Plains Indian reserves is generally thought to have failed because the native peoples lacked either an interest in farming or an aptitude for it. Sarah Carter reveals that reserve residents were anxious to farm and expended consider- able effort on cultivation. Government policies, more than anything else, acted to undermine their success. "No one has examined as thoroughly the agricultural policies that Canada pursued on western reserves." John Tobias, Department of History, Red Deer College.

McGill-Queen's Native and Northern Series

Cloth 0-7735-0755-8 $34.95

McGILL-QUEEN'S UNIVERSITY PRESS * Montreal & Kingston

444 Paul Barker



an assessment of ontario's health strategy

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